Danske Research discusses EUR/CHF outlook and thinks that the pair is likely to trade a tad higher, looking for 1.18 in 1-month ahead of an eventual break above 1.20 over the coming months.

"In our view the market currently ignores that the road to exit for the SNB entails more steps than that of the ECB and we are not there yet. However, with EUR/CHF still not on a sustainable path above 1.20, risking the recovery with exit talk is not a route we deem the SNB will want to go down.

We think the SNB will remain on the sidelines on further steps towards ‘normalisation’ for now, which should allow EUR/CHF to edge firmly into the 1.20s this year amid a continued ECB ‘normalisation’ process," Danske argues.

EUR/USD: Range-Bound With 1.22 As A Mid-Point; A Hawkish FOMC Likely This Week - Barclays

First appeared on eFXplus on Mar 19 - 11:15 AM

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Barclays Research discusses EUR/USD outlook and expects Wednesday’s FOMC meeting to be the main driver this week.

"Markets have fully priced a 25bp rate hike for this meeting and attention will centre on the Fed’s projections and dot plot. In that respect, we expect a relatively hawkish message from the FOMC with 20bp increases to the median funds rate in 2019 and 2020, modest upward revisions to inflation and limited concern, at least in the near term, of rising trade tensions, likely providing some near-term support to the USD.

We maintain our view of a broadly range-bound EURUSD, with a mid-point of 1.22," Barclays argues.

Source:

Barclays Research

Mar 19 - 12:12 PM

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GBP/USD - COMMENT-Brexit-Boosted GBP/USD Is Likely Near Its Highs

First appeared on eFXplus on Mar 19 - 09:50 AM

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News of a possible post-Brexit transition deal boosted the pound today, but the future toll that will be exacted on Britain's economy from leaving the EU means cable is probably a sell at these levels.
While the UK may have avoided Brexit disaster, it's worth remembering that the overwhelming majority of traders sold GBP when voters in the UK decided to leave the European Union in the 2016 referendum.
While cable mounted a recovery over the last year, broad dollar weakness contributed significantly to sterling's gains.
It's worth noting that more GBP is traded speculatively versus the dollar than any other currency and many traders only view the pound via GBP/USD.
It would, therefore, take an impressive pair of rose-tinted glasses to justify cable's gains in recent months as a vote of confidence in Brexit.
The wider performance of the pound, still 10% weaker since the referendum, and big interest rate moves favouring the dollar are cause to think GBP/USD is close to mid/long-term highs.

Credit Agricole CIB Research discusses AUD outlook and adopts a bearish bias in the near-term.

1- "Iron ore is down by over 15% from its peak this year and we continue to think that its heads to USD50-60 per tonne this year. The main concern for the AUD with US protectionism is if the US ramps up protectionism against China and leads retaliation, which has so far not been the case," CACIB notes.

2- "Nerves may grow on this front, however, around the G20 Summit and with these nerves the downward pressure on the AUD," CACIB argues.

3- "Interest rates will also come into further play for the AUD this week. Tensions in US money markets are already placing downward pressure on the AUD and the FOMC meeting could push UST yields higher and further add to interest rate pressures on the AUD," CACIB adds.

Locally, CACIB notes that the Australian labor market out Thursday will be the main local focus for the AUD this week where the breakdown of likely further solid jobs growth as well as the unemployment rate will attract most of the market’s attention.

Source:

Crédit Agricole Research

Mar 19 - 08:36 AM

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GBP/USD - Bulls Have Green Light For 30-Day Upper Bolli-Band

First appeared on eFXplus on Mar 19 - 06:50 AM

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GBP/USD flies with bulls focused on 30-day upper bolli-band now at 1.4072

Fourteen-day momentum has the potential to register a positive reading Mon

Would be first time since last Wed the market would record positive momentum

Our 1.3960 short is in trouble, but our stop is protected by the bolli-band

Stop just above the 30-day upper bolli-band which may cap latest gains

The chance of a EUR/USD drop is high as currency markets are exhibiting signs of risk aversion, which may lead to unwinding of very big and more costly bets on a further rise.
With EUR/USD largely 1.2200-1.2400 for over a month, those betting on a EUR/USD rise are not making the easy money they were at the start of the year but are having to pay more to hold their bullish bets, so the chance of a reduction of longs is high.
Speculators hold EUR18.4 bln of bullish bets with EUR2.4 bln of those bets made in the last month.
In this period of relative stasis the cost for those long has risen dramatically with the one-month forward swap rising by 50% to 33 pips.
With EUR/USD pushing towards the lower end of the recent range, many of these fresh bets are losing and all of those long are paying more for the privilege, cutting into any existing profits.

The ease of which EUR took out the strong 1.2270 support was not exactly expected. As highlighted last Friday (16 Mar, spot at 1.2305), a break of this level would indicate that the immediate pressure has shifted to the downside. While we are not ready to adopt a fullfledged bearish stance just yet, we expect EUR to move lower from here and test the next strong support at 1.2200. Only a move back above 1.2385 would indicate that the current downward pressure has eased. On a shorter-term note, 1.2345 is already a strong resistance.

GBP dipped below the strong 1.3895 support and as highlighted last Friday (16 Mar), a breach of this level would indicate that the mild upward pressure has eased and that GBP has moved into a consolidation phase. In other words, we continue to hold a neutral outlook but we expect GBP to trade sideways from here, likely within a 1.3840/1.4000 range.

The solid support zone highlighted at 0.7715/25 is being tested sooner than expected and a clear break of this level would indicate that the month-long neutral phase has ended and a move towards 0.7630 has started. This appears to be a likely scenario unless AUD can move and stay above 0.7770 within these few days.

NZD/USD: Neutral (since 05 Feb 18, 0.7280): Scope for a probe of the major 0.7175/85 support zone.

There is not much to add to last Friday’s update (16 Mar, spot at 0.7275) wherein we hold the view that there is scope for NZD to probe the major 0.7175/85 support zone. That said, the continuing sharp and rapid decline was unexpected as NZD lost about -1.6% over last Thursday and Friday, the largest 2-day decline since early February. While the 0.7175/85 support zone is expected to offer solid support, a break of this zone is not ruled out and would indicate that NZD has moved into a bearish phase. The odds for such a move are not that high at this stage but would increase quickly unless NZD can reclaim 0.7300 (0.7265 is already quite a strong resistance level).

USD dipped below our expected 105.70/107.50 consolidation last Friday and hit a low of 105.59. While the decline lacks momentum, the undertone has weakened and from here, a retest of the month-to-date low of 105.25 seems likely. At this stage, the prospect for a clear break of this level is not high. Overall, only a move back above 106.80 would indicate that the current mild downward pressure has eased.

Source:

UOB Research

Mar 19 - 12:12 AM

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USD/JPY - Soggy, Upside Limited To 106.15, Off Later

First appeared on eFXplus on Mar 18 - 10:45 PM

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USD/JPY up some early to 106.15 but extent of upside, to 105.75 later.

The EUR/USD bull trade is still in strong hands but the grip is slipping as the trade stalls and the cost of carry continues to ratchet higher. U.S. and European yields diverged notably this week, primarily behind a break lower in Europe as markets reconsidered the ECB's weak inflation forecasts from the March 8 meeting. Meanwhile, benchmark treasury 2yr yields moved to the highest level since 2008 behind good data and rising expectations for upgraded rate projections from the Fed. The DXY ended higher for a fourth week but still trades poorly and will need to clear neckline resistance at 90.60 before USD bears get too concerned.

The 10yr US treasury-German bund spread moved to the widest since late 2016, a level that last corresponded with a sub-1.1000 EUR/USD. A lot has changed fundamentally since then (especially US deficits) but nonetheless it makes for a less compelling argument to stay long EUR here.

June 2019 Euribor futures breaking bullish. Any thought of an ECB rate hike in the next year appears to be completely out the window.

The AUD/USD finished at new lows on the year. Undoubtedly some worry about getting caught in the crossfire of any U.S.-China trade dispute. But the sharp turn lower in the entire high-beta FX complex could be a sign that the bear market in the larger USD is coming to an end.

CIBC Research discusses GBP outlook and advises caution on GBP around current levels.

"Call it Brexit-fatigue, or call it simple complacency, but it’s beginning to look like currency markets are underestimating downside risks to sterling.

Implied volatility has been falling and investors have almost fully priced in another hike from the Bank of England by May. However, there remains the possibility that next week’s EU Leaders Summit does not end in an agreement on Brexit transition/implementation. Furthermore, wage growth, while having accelerated, is still negative in real terms, with consumer discretionary spending also looking weak of late.

All this suggests more caution regarding sterling than is currently priced into markets, with the potential for Brexit and BoE disappointment very possible," CIBC argues.

Source:

CIBC Research

Mar 16 - 02:36 PM

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GBP/USD - Finds Support Ahead Of 55-DMA By 1.3880

First appeared on eFXplus on Mar 16 - 12:20 PM

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GBP/USD bounces off 1.3887 low by Lon fix, ends Lon session 1.3920

Pair offered after 1.3980 high in Europe, offered last 4 days pre-1.4000